FBA Brand Purchase - Taxation

Buying income isn’t limited to dividend stocks.

At some point you may buy an income producing asset, a functioning ecom website, or even another small business.

How you do this can have significant tax consequences.

Here’s what to think about.
Let’s say you want to buy a functioning FBA business. The business has the following in a corporation:

-A couple of successful brands,
-Supplier contracts with favorable terms,
-Ungated for toys and health on Amazon
-A warehouse lease,
-An engage employee, and
-A website
You and the owner have agreed to a $150k purchase price, but what are you buying?

If you buy the EQUITY/stock of the corporation, you will get $150k of tax basis in the stock, meaning you will likely never recover the basis in the form of a deduction unless you sell the company.
If you set up your own entity and buy the ASSETS (all of the operations listed above), you WILL recover that $150k in the course of the business at a minimum of a $10k deduction per year for 15 years, but possibly faster.
$150k of deductions vs potentially none and you have effectively purchased the SAME business.

Deal terms matter.

Let me know.

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